Cooling Trends Emerge in China's Gold Market

China's gold market, which alongside central bank demand has underpinned the multi-year rally, is displaying clear signs of cooling amid heightened uncertainty. Gelonghui Finance reported that 14 gold ETFs recorded combined net outflows exceeding RMB 10 billion ($1.48 billion) over the past month through June 3.

The once-popular approach of buying on dips now faces divergence in volatile conditions. Hong Kong-listed Chinese gold equities posted unusual sharp declines, with China National Gold International Resources and Jihai Gold falling 3.6%, Zijin Mining dropping 3.5%, and Shandong Gold along with Zhaojin Mining losing nearly 3%.

Physical demand has also eased substantially, as Shanghai Gold Exchange withdrawals in May totaled just 63.5 tonnes—the lowest since February 2020 during the initial COVID-19 wave and roughly half the March level. Industry professionals noted that while short-term price volatility may persist, gold’s core strategic allocation value remains intact over the medium to long term.